Thinking about owning a franchise and wondering if the Subway franchise cost is a smart investment? With over 40,000 locations worldwide, Subway is one of the most recognizable names in the fast-food industry, offering franchisees the chance to tap into a well-established and profitable brand.
But before diving in, it’s important to ask: Is the investment worth it? Buying a franchise comes with financial commitments, and understanding the costs, benefits, and the franchise agreement is key to making the right decision for your future.
In this blog, we’ll break down what the Subway franchise cost includes, what you get in return, and whether it’s the right fit for your financial and business goals.
FAQs
Getting a Subway up and running usually costs $229,000 to $522,000, plus a $15,000 franchise fee. Compared to something like McDonald’s—which can hit $1.2M to $2M—Subway is much easier on the budget.
You’ll pay 12.5% of your weekly sales—8% goes to royalties and 4.5% to marketing. It’s basically your contribution to keeping the brand strong.
Definitely! Subway works great in gas stations, airports, and similar spots. These locations often cost less to build out, though the $15,000 franchise fee stays the same.
It really depends on your location and how well you run things. Many owners make around $30,000 to $100,000+ a year before taxes and expenses.
You’ll need at least $15,000 of your own money to get started. It’s there to make sure you have a little financial cushion in the beginning.
Inside the Subway Franchise: A Small Idea That Became a Global Success
Subway’s journey began in 1965 when 17-year-old Fred DeLuca needed money for college. His family friend, Dr. Peter Buck, suggested opening a submarine sandwich shop and invested $1,000 to get it started. Their first store, Pete’s Super Submarines, opened in Bridgeport, Connecticut, serving fresh, customizable sandwiches.
Customers loved it, and by 1974, with 16 locations, they turned to franchising to expand. That decision transformed Subway into one of the largest fast-food chains in the world, with a proven business model and over 36,592 locations in 100+ countries today.
Owning a Subway means you’re backed by a proven franchise system that sets you up for success. Here’s what you get:
- Instant Brand Recognition: A name customers already trust.
- Comprehensive Training: Everything you need to run your business confidently.
- Site Selection & Build-Out Support: Help find the right location and set up.
- Exclusive Products: Subway’s signature ingredients and menu items.
- Ongoing Support: Tools for financial tracking and inventory management.
- Loyalty Program: Keep customers coming back with Subway rewards.
- Menu Innovation: Fresh updates with new and seasonal offerings.
With local Development Agents providing ongoing support, you’re never on your own. If you’re looking for a fast-food franchise with a strong reputation and built-in customer base, Subway is a top choice.
Subway Franchise Cost
How much does it cost? One of the biggest benefits of a Subway franchise is the low initial franchise fee and investment compared to other fast food chains.
For example, opening a McDonald’s franchise requires an initial investment of $1,215,000 to $1,945,000 and a franchise fee of $45,000. A Subway franchise costs between $116,000 and $263,000, with a lower initial franchise fee of $15,000. So it’s more affordable for small business owners, but franchisees must also budget for ongoing royalty and marketing fees.
Cost of Buying an Existing Subway
Buying an existing business, such as an existing Subway, involves additional costs beyond the purchase price. Subway franchise fees for an existing restaurant vary based on location type, age, and performance.
Add-on costs are $7,500 for training programs and support and potential upgrades, marketing fees, and ongoing expenses. Subway requires at least $15,000 of non-borrowed personal resources to be a franchisee.
Before buying an existing franchise, do your due diligence and review past cash flow and operational data. Talk to a consultant to make sure the investment aligns with your financial goals.
Cost of Buying a New Subway Franchise
Opening a new Subway franchise has a lower initial investment than many other fast food franchises.
However, the initial franchise fee, operating system expenses, and other start-up costs—such as buying real estate, renovation, construction costs, and signage—vary based on the location type and real estate costs. Subway provides store development assistance, including guidance in lease negotiations and construction, which can help mitigate some of these costs. For example, high-demand areas like New York City require more liquid capital.
Subway franchisees must also budget for ongoing costs, 12.5% of weekly gross sales with 8% going towards franchise royalty fees and 4.5% towards marketing fees.
Based on the location, sales figures and average sales can help forecast gross revenues. This financial forecasting will be key to understanding the franchise’s long-term viability.
Traditional Subway
Subway restaurants follow standardized menu items, decor, and equipment requirements. Costs include the initial franchise fee, real estate, property improvements, advertising fee, and setup expenses ranging from $229,050 to $522,300, depending on various factors.
Non-Traditional Locations
These are located in convenience stores, department stores, military bases, gas stations or other non-traditional settings. Costs are lower due to the unique location type, and the franchise fee is the same, which is $15,000
Subway Franchise Initial Franchise Fee
When calculating the total initial investment in a Subway franchise, it’s important to consider the franchise agreement and associated fees. Here’s a breakdown of the costs:
- Real estate and property improvements
- Professional services
- Supplies and equipment
- Furniture and fixtures
- Insurance
- Royalty fee
- Marketing fees and Advertising fees
- Working capital for at least 3 months
- Miscellaneous expenses
Is It Worth the Earning Potential?
Deciding if a Subway franchise is right for you comes down to how much you can make and the benefits of owning your own business. While Subway is a global brand with a lower initial investment than other fast food franchises, your profit will depend on several key things.
1. Location and Market
Where you set up shop can make or break your business. A busy location, including non-traditional locations like airports, universities, or hospitals, can drive sales, while a low visibility or low foot traffic spot can struggle. Before committing to a location, ask yourself:
- Who are your customers? A steady stream of people who love fresh, quick food is key to repeat business.
- How much competition is nearby? Too many similar options in one area can make it harder to stand out.
- What’s the local economy like? If people in the area have disposable income and stable employment, they will spend money on dining out.
2. Understanding the Costs
One of the first questions potential franchisees ask is, “How much does it cost to open a Subway?”
Beyond the initial costs, franchisees must also complete a two-week training program. Here are some ongoing expenses to consider:
- Franchise Royalty Fees: Subway takes 8% of gross sales (before taxes) each week.
- Marketing Fees: An additional 4.5% of gross sales goes towards national advertising and brand promotion.
- Day-to-Day Operating Costs: Rent, labor, food inventory, and utilities will impact your bottom line. Keeping an eye on expenses is key to maximizing profit.
3. How to Keep Your Subway Franchise Profitable
A well-managed Subway franchise has the potential to earn between $30,000 and over $100,000 per year, but profits can vary based on location, expenses, and market conditions. Keep in mind that these figures are before taxes and other costs.
To maximize your earnings and land on the higher end of that range, take full advantage of both national and local support while focusing on:
- Smart Scheduling: Managing labor costs while providing great service is a juggling act.
- Minimizing Waste: Keeping food waste low and inventory optimized can make a big difference.
- Smart Promotions: Offering the right deals at the right time can drive sales without eating into profit.
4. Fees and Royalties Impact Your Earnings
Subway’s brand recognition brings in customers, but royalty and marketing fees take a slice of your profit. Planning for these costs and making sure they’re covered by strong sales is key to long-term success.
5. You as an Owner Matter
Your level of involvement will directly impact your franchise’s success. Owners who are hands-on—engaging with customers, training staff, optimizing operations, and leveraging local support perform better. If you want to increase profitability, consider:
- Multiple Locations: Many franchisees scale up by running multiple units; they benefit from bulk purchasing and streamlined management.
- Operational Efficiency: Small adjustments in labor scheduling, vendor negotiations, or pricing can make a big difference.
- Great Customer Service: Repeat business is key to sustained profitability, and happy customers lead to better sales.
6. Understanding the Risks and Long-Term Potential
Like any investment, owning a Subway franchise comes with risks. Factors such as market saturation, changing consumer trends, and economic downturns can impact profitability. Doing your homework—including reviewing Subway’s FDD and talking to existing franchisees—will give you a better idea of what to expect.
Subway restaurants are always evolving, introducing new menu items, improving digital ordering systems, and updating store designs to stay competitive. These initiatives will help franchise owners attract customers and drive business growth.
Final Thoughts
Owning a Subway franchise can be an exciting opportunity, but it’s not a decision to rush into.
While the brand recognition and lower startup costs make it appealing, your success will depend on the right location, smart financial management, and how involved you are in running the business. It’s a big commitment, and you want to make sure it’s the right fit for you.
That’s where a franchise consultant can help—guiding you through the process, breaking down the costs, and making sure this investment aligns with your goals. With the right support and preparation, you can step into franchise ownership with confidence, knowing you’re investing in a proven business.
